The prediction by Ali Charts is based on technical analysis, specifically the formation of a bear pennant on the daily chart. If Ethereum breaks the $3,400 support level, it could trigger a significant correction. This analysis is relevant and important for investors as it highlights a potential bearish trend and the importance of support levels for Ethereum's price stability. The confidence level is high due to the specific technical formation cited, but it remains less than 100% due to the unpredictable nature of the crypto market.